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The International Monetary Fund’s October World Economic Outlook released yesterday re-affirms that a smart recovery is afoot in India.
The international body has retained its GDP growth projection at 9.5 percent for India in FY22. But more importantly, it said that in FY23, India will grow at 8.5 percent.
That somewhat echoes what the Reserve Bank of India’s bi-annual Monetary Policy Report said last week. The central bank’s model has projected a 7.8 percent economic growth in India in FY23, much higher than the median estimate of 6.8 percent by professional forecasters.
Coming on the back of a dip in consumer price inflation to a 5-month low in September and an 11.9 percent increase in the August industrial production numbers, things are looking up for the economy.
As the economy opens up, output in many industries has exceeded pre-COVID levels as well. In fact, these growth projections could be revised upwards if circumstances become more favourable on multiple fronts like vaccinations, reforms, privatisation and so on.
“Stronger-than-expected pent-up demand amidst a faster pace of vaccination and mild variants of the virus, and the government’s focus on infrastructure investment, asset monetisation and reform measures provide an upside to the baseline growth path,” said the RBI’s Monetary Policy Report.
On Monday, for example, the government launched the so-called GatiShakti master plan which brings as many as 16 ministries together on a single digital platform to plan and coordinate the implementation of infrastructure projects. This will incorporate the infrastructure schemes of various ministries and state governments such as Bharatmala, Sagarmala, inland waterways, dry/land ports and UDAAN, among others.
The key factors which could prevent the economy from marching onwards and upwards are, by now, familiar ones: higher prices of crude oil and other commodities, continued logjam in supply chains of key raw materials from coal to computer chips and finally, a surge in COVID cases and a faltering pace of vaccination. These are the risk factors for the economy and something which investors must monitor.
Our research team has also written the following notes rich with investing insights:
Tata Motors says hello to TPG Rise to unlock EV's huge potential
Saregama: Strong result, but valuation factors in positives
What should investors do with this diagnostic play as COVID cases drop?
What else are we reading today?
Aluminium price spike to benefit Indian producers, but a risk lies in wait
The Green Pivot | New EV play can spark faster turnaround for Tata Motors in passenger vehicles
Has the sky cleared up for the airline sector as flight curbs go?
India’s urban growth engine may stutter if power shortage worsens
Rising discom overdues are straining the power supply chain
IEA warns clean-energy spending must triple to curb climate change (Republished from the FT)
Technical Picks: Havells India, Escorts, Kotak Bank and HCL Technologies
(These are published every trading day before markets open and can be read on the app)